Adnoc issues four tenders for Shah gas deals

Abu Dhabi, May 25, 2009

Abu Dhabi National Oil Co (Adnoc) has issued tenders for four large contracts related to the Shah gas field development project, its chief executive said on Monday.

An official at the state-run company, the United Arab Emirates largest oil producer, said the contracts will be awarded in 2010.

'Four huge tenders relevant to the development of the Shah gas field have been issued to contractors,' Adnoc chief executive Yousef Omair bin Yousef told an industry conference.

In March, a senior Adnoc official said Adnoc and its partner ConocoPhillips expected to award most contracts for developing the Shah field by the end of the year.

'The (global financial) crisis has created a window of opportunity to carry out our giant projects at a lesser cost and higher quality, bin Yousef said.

Ismail Al-Ramahi, Adnoc gas chief, said the firm wants the total cost of the Shah project to be around $10 billion and is expecting a decline of 30 to 50 percent in the cost of its overall projects portfolio, estimated earlier at $35-50 billion.

Adnoc will award contracts in a project to link marine and land gas facilities in the next 'couple of months', Al-Ramahi said.

Bin Yousef said Adnoc 'has expedited the implementation of its projects that are relevant to expanding its oil output capacity and gas production'. He did not give details.

The Shah gas development is the first in the UAE of a sour gas field. The UAE has the world's fifth-largest gas reserves, much of it sour. UAE has been slow to develop those reserves to meet rapidly rising domestic demand.

Adnoc is expected to invite bidders to compete for the 10 engineering, procurement and construction contracts soon, Ali Al-Murar, senior vice president of support services at the joint venture company, told Reuters in March.

The project may be completed in 2012, Al Murar said at the time.

Adnoc holds a 60 percent stake in Shah, while Conoco holds the remainder.

The gas at Shah has a content of around 30 percent of deadly hydrogen sulphide, making it tougher to produce than conventional gas reserves.

The project, which will be implemented in three phases, will process about 1 billion cubic feet per day of sour gas from 20 wells.

The project includes building facilities to gather and process the gas and sulphur. - Reuters